Interview for Capital: Are you buying a house or are you waiting some more? What a specialist says about the evolution of the real estate prices
The evolution of the real estate market depends on the crisis in Greece, because, if the situation of this country will stabilize and then the banking system will stabilize too so the local market will have money and it will be easier for the people to access loans for investments, says Ilias Papageorgiadis, the CEO and one of the founders of MORE Real Estate Services, a Top 10 company in the Romanian real estate industry.
There are three pillars that support the stabilization of the prices in Romania. “One is the State, another one is the National bank and the third is represented by the banks. Keeping in mind that the State started to withdraw from the First House program, that the banks have less money and if we take into consideration the fact that the National bank imposed some tougher regulations for the creditors, it means that there are less money on the market and the prices will decrease.” thinks Ilias Papageorgiadis.
The First House is a mechanism created by the Romanian State to protect the owners so the real estate prices to remain at a higher level. “The banks offered loans inside the program because the State guarantees. Now, if the State withdraws, which is a normal thing, that means that the banks should come with their own programs as a substitute to the First House program” consider the real estate specialist.
The First House program was a decision that cushioned the market and we’ll probably have something similar next year if Romania will have elections, but it’s not normal for the State to get involved to help the real estate market, added Ilias Papageorgiadis.
Out of the four editions until now, the forth didn’t have much success as the first ones. Papageorgiadis says that the buyers are seeking properties with smaller prices than the ones on the market.
How will the developers bear the fourth year of decline
Next year it will be the fourth year of decline for the real estate market. How should the players reposition? According to Papageorgiadis, the failures of the residential projects had two causes: “Either the project was incorrect or bad, or the bank couldn’t sustain the project.” In his opinion, we will have a new generation of real estate projects, “with smaller areas, better location, a more attractive price for the land and smaller common spaces.”
According to Papageorgiadis, the first generation of real estate projects was not developed for the middle–class Romanians but the second generation will be 90% developed for them. The past projects where buildings were constructed using loans, will depend on the banks.
“If the banks will have problems with the money then they might sell some projects with lower prices. If they don’t do that, then the market will remain “blocked” added Ilias Papageorgiadis. In his opinion, the market is struggling right now with a “bottle neck” kind of situation for this type of developers.
“We have lots of projects with prices not high, but not low either for what the investors are willing to pay. So the offers are not meeting the demand. The problem will be solved if the bottle breaks. The banks must accept and assume their losses. If the banks accept to sell with lower prices, they will find customers. People are looking for opportunities.” says Papageorgiadis.
“Regarding the retail market, dedicated to the commercial spaces, there are lots of demands on the market for this type of projects and lots of brands want to enter the Romanian market.
When the price is right, the investors accept. There are big or small projects with access to the street. There is demand and when the price is good we’ll have some transactions. Next year we are waiting even more brands to enter the Romanian market compared to 2010” says Ilias Papageorgiadis.
The source of the article and the photo: Capital (Romanian language)